The right stocks can make you rich and change your life. The wrong ones, though, can do far more damage than simply underperforming. They can erode your wealth, eating away at your hard-earned profits. These are the stocks that act as pure portfolio poison, and while not all investors like to confront this reality, it’s essential to know when to walk away.
Here are three companies that investors should reconsider holding. If you own any of these “toxic stocks,” it may be time to sell.
Nike (NKE) – Facing Mounting Headwinds
- Down 31% over the past year, with recent analyst downgrades signaling further downside.
- U.S.-China trade tensions could worsen, with tariffs possibly rising beyond 10%, threatening both Nike’s supply chain and Chinese consumer demand.
- Citi downgraded Nike to neutral from buy, cutting its price target from $102 to $72, citing weak sales, margin pressure, and a lack of compelling new product launches.
- Growing competition from Hoka, On, and Birkenstock is taking market share, while Nike’s reliance on discounting to clear inventory could hurt future full-price sales.
- With trade risks, competitive pressure, and profitability concerns, Nike looks like a stock to avoid for now.
ChargePoint (CHPT) – The Struggles Keep Piling Up
- Stock has collapsed from over $30 at its IPO to around $1 today due to slowing growth and rising competition.
- Revenue expected to decline 17%-19% in fiscal 2025, with analysts forecasting just $416 million in sales—a major red flag for a supposed growth company.
- Still deeply unprofitable, with projected $270 million in GAAP net losses this year and negative $127 million in adjusted EBITDA.
- Pushed back its goal of reaching profitability from 2025 to at least 2027, while facing increased competition from Tesla’s Supercharger network and EVgo.
- Dilution risk remains high, with the share count up 59% since going public, and more dilution likely as cash burn continues.
SoundHound AI (SOUN) – Too Much Hype, Not Enough Substance
- Stock is up 165% since Election Day, fueled by AI hype rather than solid financial performance.
- Revenue of just $67 million over the past 12 months, yet posted a $111 million net loss, highlighting a major profitability issue.
- Trading at an extreme price-to-sales ratio of 65, making it one of the most expensive AI stocks on the market.
- Recent deals with Torchy’s Tacos and Church’s Texas Chicken are promising but not enough to justify the stock’s valuation.
- Without a clear path to profitability, investors are paying a premium for speculation. This could be a good time to lock in gains before reality sets in.
These stocks each face significant hurdles, whether from macroeconomic risks, declining fundamentals, or unsustainable valuations. If you’re holding any of these names, it might be time to reconsider.